Leading shares regained their poise after yesterday's dip, helped by a revival in mining shares and renewed takeover speculation surrounding Legal and General.

The insurer closed up 4.5p at 85.85p on talk of a possible break-up bid led by rival Resolution, which recently joined the FTSE 100 after buying Friends Provident. Resolution, up 0.15p at 97.15p, has long been tipped as a major consolidator in the sector.

Meanwhile metal prices were lifted by strong data from China, which showed factory output had jumped to a 19 month high in October, as well as continued weakness in the dollar. Gold hit yet another new record of almost $1,120 an ounce, while copper rose around 2%. So Randgold Resources recovered 281p to £48.58, Mexican silver miner Fresnillo added 49.5p to 892p and Rio Tinto rose 75p to £31.18.

By the close the FTSE 100 had climbed 36.20 points to 5266.75, helped by upbeat comments from Bank of England governor Mervyn King and better than expected unemployment figures.

J Sainsbury climbed 10.6p to 338.2p after announcing a 19% rise in first half profit, higher than analysts expectations. Tesco added 4.15p to 418.7p after a buy note from Shore Capital following a meeting between the broker and finance director Laurie McIlwee. Shore analyst Clive Black said the supermarket had good opportunities in China while there is also scope for more cost savings across the group, especially in its international operations. He said:

Challenges persist for the group but we also believe that it is over the worst of the recessionary storm and calmer waters are ahead.

The meeting spent a considerable period of time on the Chinese opportunity. Tesco will shortly open its first shopping centre development in China at Foshun in the north east of the country. At 500,000 square feet this is a considerable retail, recreation and residential development, anchored by a 100,000 square foot Tesco hypermarket. Encouragingly, 75% of the Foshun retail development is sub-let and around 60% of the residential properties pre-sold. Foshun reminds Tesco of Korea over a decade ago with a very limited retail infrastructure. Accordingly, Tesco seeks rapid expansion in under-invested but large cities on the eastern seaboard of China (1.3m people live in Foshun) with 22 opportunities already in tow for the next 24-36 months. China is expected, by us, to become a growing focus of investor interest in Tesco.

[Elsewhere] Mr McIlwee sees considerable scope for further operational improvement. We were struck by the depth of his operational observations and knowledge and believe that he will help to bring group wide improvements. So, we expect to see the Step Change programme that is currently driving around £550m of cost out of the UK applied to its international markets. We expect to see considerable work on working capital in the non-food and international operations while we suggest that the benefits of international sourcing can improve Asian buying margins further (around £750m of working capital progress is anticipated). It will also be interesting to see if electronic shelf edge labelling emerges out of the laboratory. All in all, there appears to more for Tesco to go f

or on its cost base as the group leverages its scale in food and non-food.

International Power ended 7.1p higher at 264.3p after raising its profit guidance. In August it said it expected full year profits for 2009 to be down on last year's figure. Now it says they will be broadly in line, with free cash flow significantly ahead of last year. It added that Europe and Australia was performing ahead of expectations, while the US remained challenging. Global demand for additional power generation - especially in developing countries - was continuing to drive growth, it said. Analysts at Cazenove were positive on the company, saying:

International Power's share price has performed poorly ahead of the interim management statement; the second worst performing European utility share in the last month, underperforming the sector by 7.6%. We believe that the shares should reverse much of that underperformance following today's announcement and reiterate our outperform recommendation.

It was a different story at Scottish and Southern Energy, down 7p at £10.73. It announced a 36% increase in half year profits and kept its guidance for a small increase in the full year figure. It said later it did not see any pick-up in the economy during 2010, and did not expect any growth in energy consumption in the UK until 2012. It is also apparently interested in EDF's UK asset sales.

Credit Suisse said the SSE results were in line with expectations, and the valuation was not attractive enough for the bank to turn positive on the shares.

Publisher Reed Elsevier was the biggest faller in the leading index, down 19.5p at 465p after the surprise departure of chief executive Ian Smith after just eight months in the job.

Tullow Oil slipped 20p to £12.49 despite news that it had sold a third of its licence off French Guiana to Shell, and also planned to dispose of half its interest in the Lake Albert Rift Basin in Uganda.

Among the mid caps IT group Micro Focus International jumped 68.5p to 410.5p. The company said its first half figures would beat forecasts following a strong performance from its recent acquisitions, Borland Software and Compuware's testing business. Panmure Gordon said:

This is a sparkling statement with better than expected first half revenue, profit and the integration of Borland and Compuware way ahead of what we expected which heralds full year upgrades. We increase 2010 earnings per share from $0.447 to $0.561. We raise our target price from 438p to 500p. The current valuation is just plain wrong – certainly shares have suffered due to the departure of the chief executive, but this statement addresses concerns and marks the start of the road back.

But National Express lost 7.1p to 330.9p after unveiling its £360m cash call at 105p a share.

Finally Petra Diamonds dipped 5p to 65p as traders said the company was currently touring the City seeking investors for a £50m placing.